How to buy bitcoin in the UK (and elsewhere)

The bitcoin price has been quietly moving up and, almost inevitably, I am getting messages from people asking how to buy it.

Bitcoin should make up a core part of your investment portfolio. Never mind the noise, the doubts, the FUD (fear, uncertainty and doubt), the “but I don’t understand how it works”, bitcoin is an incredible computational breakthrough with enormous implications for the world. It’s the most technologically brilliant form of money ever invented. My advice is to own a share of the pie - it is in limited supply.

So here, by popular demand, we outline the best ways to buy bitcoin in the UK and elsewhere.

This is a reversion of an article I put together for paid subscribers last year, but I am making it available to one and all.

I wrote the first (and many say the best - who am I to disagree?) book on bitcoin from a recognised publisher back in 2014. So I know a thing or two about it.

“A great account. Read it and glimpse into the future,” said Richard Branson. Though it’s not clear he actually read it.

When he was Chancellor, Rishi Sunak, like George Osborne before him, gave it the big one about turning the UK into a hub for cryptocurrencies and the industries of the future, but these are just words. In practice, the UK regulator, the Financial Conduct Authority (FCA), has made life very difficult for the UK investor who is interested in cryptocurrencies. It has banned the sale of crypto derivatives and exchange traded notes to retail investors, which means traditional brokers are out, and it it has made sending money from a bank to a crypto exchange very problematic.

Fear not. The guide will explain all.

My first dollop of advice is this: before putting any significant sums to work, research as much as you can. Read about bitcoin, listen to podcasts and, above all, try out the tech. Buy small amounts, get a friend to do the same, and practice sending small amounts of money to each other. When you have got the hang of things, then you can invest more significant sums.

Bitcoin’s repeating cycle

Bitcoin seems to go through four phases with every cycle - and these cycles repeat.

* There’s the Quiet Accumulation. Few outside of the bubble of ardent bitcoiners take notice, as it discreetly creeps up. 

* The Frenzy and Blow-Off Top. The price rises accelerate. There is a rush to buy. The media is all over it. Everyone on social media is crowing. There’s a huge row about whether bitcoin is in a bubble or not. I get invited onto the BBC to talk about it. You get a phonecall from your mate’s nan asking how to buy it. Dean from up the flats starts holding court in the cafe about irresponsible monetary policy at the Federal Reserve. Bitcoin has one of its blow-off tops. See 2013, 2016 and 2021 for more details.

* The Monster Correction. Bitcoin loses over 50% of its value. Economists who missed the boat go on telly and declare they were right, ignoring the fact that the price to which bitcoin corrected to is several hundred percent above where the quiet accumulation phase began. Earlier in bitcoin’s evolution these corrections could be 90% or more. Now they have “scaled back” to more like 80%.

* The Frustrating Consolidation. Bitcoin goes into a period of range trading, consolidating the gains of the previous bull market. This is a period of relative quiet, at least by bitcoin standards. There are rallies that get many excited, we might even be seeing one of those now, but they prove to be false dawns. Investors get frustrated by the grinding action. The media loses interest. Many forget about it, and so we gradually drift into another Quiet Accumulation phase.

We have just had a classic-of-the-genre Monster Correction, during which bitcoin lost 80% of its value, going from around $68,000 back to just under $16,000.

Since December it has been quietly rallying and today we sit around $23,000.

It might go back and re-test $16,000. It could fall another 80%. Then again it could go up and up and up from here.

The best time to accumulate is during the Frustrating Consolidation or the Quiet Accumulation phase, and I suggest that is where we are now. Somewhere in stage 3 or 4 of the cycle.

There are many who dismissed it late last year as it fell to $16,000. I take the other side. Given the spate of bankruptcies, the Sam Bankman-Fried saga and more, I think it’s pretty amazing that it didn’t go lower.

The best ways to buy bitcoin

There are three ways to get hold of bitcoin: you can earn it, you can buy it or you can mine it. I suppose you can steal it as well. But that’s not something we cover here. Or anywhere.

Forget mining for now. Bitcoin mining is beyond the scope of this article.

Earning bitcoin is simple. All you need is a wallet. As long as the buyer of whatever product or service you are selling is happy to pay you in bitcoin, you just send them your wallet address, instead of your bank details, and they can pay you in bitcoin, just as they would any other form of money.

There are countless wallet providers. I like Exodus, because it works on both your phone and your desktop, and Muun, because the interchange between bitcoin and the lightning network is very user-friendly.

Follow the instructions they give you to get started. They have videos to help you. Keep a note of your seed phrase and store it somewhere safe. Put aside an hour to have a play, and familiarise yourself with how it works.

So that’s how to earn bitcoin. What about buying it?

To buy bitcoin, you need to go through an exchange - the equivalent of a broker or bureau de change.

The best exchanges to buy bitcoin

There are so many exchanges now, and they all have their pros, cons and idiosyncrasies. The best for UK investors are probably any of Coincorner, Gemini, Kraken, Binance, Bitfinex, CEX.Io, Bitstamp, Poloniex, Bittrex and eToro. The one I use the most is Coin Corner. I have an affiliate deal with them.

Opening an account with an exchange is a bit tiresome with all the ID checks, but it has to be done – broadly speaking, the more you want to buy, the more paperwork you have to fill in. And do make sure you set up 2 or 3FA. Most exchanges insist on it.

Kraken, Bitfinex and Binance seem to have the cheapest commissions, but they are badly lacking in customer service and, if something goes wrong, you won’t get much help. Also - don’t buy off the front page. You will end up paying higher commission. Buy through the trading apps using a limit order. Commission rates are lower there for some reason. I guess it’s a way of snaring newbies.

As I say, the one I use the most is Coin Corner. You can’t buy sh*tcoins with them. It’s good to have this temptation removed.

Easier options for small amounts include Bittylicious or even bitcoin ATMs (but both their commissions and spreads are vast).

Revolut makes it easy to buy bitcoin (and easy to open an account), but you can’t then move your bitcoins elsewhere. You can only sell back to Revolut, which is somewhat besides the point. But it also means Revolut solves the storage problem for you, though I wonder, for reasons explained here, how much protection you’ll have if they get hacked.

Advanced users and purists will prefer the decentralised exchanges, but we will leave those for another day.

Sending money to an exchange

Once you have your account set up, you’ll experience the delights of sending money to your exchange via a bank. You might end up having to make a phone call to the bank at this point (and you’ll wait a while; banks’ response times have become very slow). The FCA-registered exchanges, such as Gemini, tend to be the easiest in this regard. (You can use a debit cards with CoinCorner and most of the others).

I got so frustrated with HSBC blocking my transfers to crypto exchanges, that I switched bank to “challenger bank” Starling. Starling were fine at first, but now they have changed their rules. Conducting some research on Twitter, Barclays and Natwest are hopeless. HSBC, Halifax, Nationwide, Santander and Lloyds might let you after a few phonecalls. Revolut and Monzo are ok.

In order to use crypto exchanges and send “significant” sums of money, my advice is to open an account with Monzo or Revolut. Send your money from your normal bank to them, then from them to the crypto exchange. (But a word of warning: don’t leave large amounts of money for long periods with Revolut. I have heard some nightmare fraud stories).

To open an account, have your passport to hand and it can be done on your phone, simply, in just a few minutes. This seems a long-winded way of doing things, but it works.

Send however much you want to spend on bitcoin to your Monzo account, and then from Monzo send it to an exchange.

Share this post with anyone you know who might want to buy bitcoin.

Other ways to get exposure to the bitcoin price

If you’d still prefer some sort of listed option, there are various options, even to UK investors. Not as good as the real thing in my view, and during this bear market they have been very weak, much weaker than bitcoin.

There is Microstrategy (Nasdaq: MSTR) which has become something of a proxy for bitcoin as it owns so much. Coinbase (Nasdaq:COIN) is another option. London has a listed bitcoin miner, Argo Blockchain (LSE: ARB), and both Vaneck and Han have crypto-related ETFs.

And if, after all that, you prefer gold, my guide to buying gold is here.

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Disclaimer: I am not regulated by the FCA or any other body as a financial advisor, so anything you read above does not constitute regulated financial advice. It is an expression of opinion only. Crypto is a famously risky sector so please do your own due diligence and if in any doubt consult with a financial advisor. Markets go down as well as up. Especially crypto. I do not know your personal financial circumstances, only you do, but never speculate with money you can’t afford to lose.

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